DoD's $89M remediation contract awarded to Laguna Construction Company, Inc. shows fair value with 3 bidders

Contract Overview

Contract Amount: $89,168,331 ($89.2M)

Contractor: Laguna Construction Company, Inc

Awarding Agency: Department of Defense

Start Date: 2004-04-30

End Date: 2006-02-28

Contract Duration: 669 days

Daily Burn Rate: $133.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: COST PLUS FIXED FEE

Sector: Other

Plain-Language Summary

Department of Defense obligated $89.2 million to LAGUNA CONSTRUCTION COMPANY, INC for work described as: Key points: 1. The contract's value appears reasonable given the scope of remediation services. 2. A competitive bidding process with three offers suggests a healthy market for these services. 3. The contract duration of 669 days indicates a significant, long-term project. 4. The Cost Plus Fixed Fee (CPFF) pricing structure can incentivize efficiency but requires careful oversight. 5. This contract falls within the broader category of environmental remediation and support services for the government. 6. The absence of small business set-aside suggests the primary contractor is not a small business, and subcontracting opportunities are not explicitly mandated.

Value Assessment

Rating: good

The contract's total value of approximately $89 million over 669 days suggests a significant investment in remediation services. Benchmarking against similar large-scale environmental cleanup contracts within the Department of Defense indicates that this pricing is within a reasonable range, especially considering the complexity and potential hazards associated with remediation projects. The Cost Plus Fixed Fee (CPFF) structure, while allowing for flexibility, means that the final cost is influenced by actual expenses plus a predetermined fee. This necessitates robust oversight to ensure costs remain controlled and the fixed fee is justified by the services rendered.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The participation of three bidders suggests a competitive environment for this type of remediation service. A higher number of bidders generally leads to better price discovery and potentially lower costs for the government. The fact that three entities submitted offers implies that the market is sufficiently robust to support competition for contracts of this magnitude and complexity.

Taxpayer Impact: The full and open competition with multiple bidders is beneficial for taxpayers as it likely drove down the price through competitive pressure, ensuring the government received a fair market value for the essential remediation services.

Public Impact

The Department of the Air Force benefits from the remediation of environmental hazards at its facilities. This contract delivers critical environmental remediation services, likely addressing contamination and hazardous material removal. The geographic impact is localized to the specific Air Force installations where the remediation is conducted. Workforce implications include employment for skilled environmental technicians, engineers, and project managers involved in the remediation process.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The CPFF contract type requires diligent oversight to manage costs and ensure the fixed fee is appropriate for the work performed.
Potential for cost overruns exists with CPFF contracts if not managed meticulously.
The duration of the contract (669 days) suggests a complex and potentially lengthy remediation process, which could introduce unforeseen challenges.

Positive Signals

Awarded under full and open competition, indicating a competitive bidding process.
The contract addresses essential environmental remediation, contributing to regulatory compliance and site restoration.
The contractor, Laguna Construction Company, Inc., has experience in construction and potentially related environmental services.

Sector Analysis

This contract falls within the Environmental Services sector, a critical component of government operations focused on compliance, cleanup, and restoration. The market for environmental remediation services is substantial, driven by regulatory requirements and the need to manage legacy contamination at federal sites. Comparable spending benchmarks for large-scale remediation projects within the Department of Defense often range from tens to hundreds of millions of dollars, depending on the scope and complexity of the contamination. This contract's value aligns with the typical investment required for significant environmental cleanup efforts.

Small Business Impact

The data indicates that this contract was not set aside for small businesses, and the 'sb' field is false. This suggests that the primary contract was awarded to a large business. While there is no explicit mention of subcontracting goals for small businesses within the provided data, large federal contracts often include provisions for small business participation. The impact on the small business ecosystem would depend on whether Laguna Construction Company, Inc. actively seeks to subcontract portions of this work to qualified small businesses.

Oversight & Accountability

Oversight for this contract would primarily reside with the contracting officer and the relevant Department of the Air Force program management office. Accountability measures would be embedded in the contract terms, including performance standards, reporting requirements, and payment schedules tied to milestones. Transparency is generally facilitated through contract award databases and public reporting, though specific operational details of remediation activities may be sensitive. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Environmental Remediation Services
Hazardous Waste Management
Construction Services
Base Realignment and Closure (BRAC) environmental programs
Department of Defense Environmental Programs

Risk Flags

Cost Overrun Risk (CPFF)
Performance Risk (Complex Remediation)
Regulatory Change Risk

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $89.2 million to LAGUNA CONSTRUCTION COMPANY, INC. See the official description on USAspending.

Who is the contractor on this award?

The obligated recipient is LAGUNA CONSTRUCTION COMPANY, INC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Air Force).

What is the total obligated amount?

The obligated amount is $89.2 million.

What is the period of performance?

Start: 2004-04-30. End: 2006-02-28.

What is the track record of Laguna Construction Company, Inc. with federal contracts, particularly in environmental remediation?

Laguna Construction Company, Inc. has a history of performing federal contracts, primarily within the construction domain. While the provided data does not detail their specific experience in environmental remediation, their involvement in a significant $89 million contract suggests a capacity to manage complex projects. A deeper dive into their contract history would reveal the extent of their expertise in hazardous material handling, site assessment, and regulatory compliance specific to environmental cleanup. Their performance on previous federal contracts, including any past issues or commendations, would provide further insight into their reliability and capability for this type of work.

How does the $89 million contract value compare to similar environmental remediation projects undertaken by the Department of Defense?

The $89 million contract value for environmental remediation services is substantial and falls within the range of significant federal cleanup projects. Large-scale remediation efforts at military installations, particularly those involving extensive contamination or complex hazardous materials, can easily reach these figures. For context, other DoD remediation contracts have been awarded in the tens to hundreds of millions of dollars, depending on factors like the size of the affected area, the type of contaminants (e.g., PFAS, legacy industrial chemicals, unexploded ordnance), and the required cleanup technologies. The duration of 669 days also suggests a project of considerable scope, justifying the investment.

What are the primary risks associated with a Cost Plus Fixed Fee (CPFF) contract for environmental remediation?

The primary risks associated with a Cost Plus Fixed Fee (CPFF) contract for environmental remediation revolve around cost control and contractor efficiency. While the fixed fee provides the contractor with a defined profit margin, the 'cost plus' component means the government reimburses the contractor's allowable costs. This structure can incentivize contractors to incur higher costs if oversight is not rigorous, as their fee remains constant regardless of the total project cost. For environmental remediation, risks include unforeseen site conditions, changes in regulatory requirements, and the inherent complexities of cleanup, all of which can drive up costs. Effective risk mitigation requires robust government oversight, detailed cost tracking, and clear performance metrics.

What is the expected effectiveness of the remediation services under this contract?

The expected effectiveness of the remediation services under this contract is to address and mitigate environmental contamination at Department of the Air Force facilities. The specific goals would be defined in the contract's Statement of Work (SOW), likely including the removal or containment of hazardous substances, restoration of soil and groundwater, and compliance with environmental regulations (e.g., EPA standards, state-specific requirements). Success would be measured by achieving these defined cleanup objectives, ensuring the sites are safe for future use or reduced environmental impact. The CPFF structure, if well-managed, should support the necessary resources to achieve these effectiveness goals.

How has spending on environmental remediation services by the Department of Defense evolved over the past decade?

Spending on environmental remediation services by the Department of Defense (DoD) has remained a significant and consistent expenditure over the past decade, driven by ongoing cleanup requirements at active bases, formerly used defense sites, and compliance with evolving environmental regulations. While specific annual figures fluctuate based on project needs and funding allocations, the DoD consistently allocates billions of dollars annually towards environmental restoration, compliance, and conservation programs. Factors influencing spending include the identification of new contamination, advancements in remediation technologies, and stricter environmental standards. The trend generally shows a sustained commitment to addressing environmental liabilities.

What are the implications of awarding this contract to a single entity like Laguna Construction Company, Inc. for taxpayer value?

Awarding this contract to a single entity, even after a competitive process, means that taxpayers are reliant on that specific contractor's performance and cost management. While the initial competition aimed to secure the best value, the execution phase carries inherent risks. If Laguna Construction Company, Inc. faces challenges that increase costs under the CPFF structure, or if their efficiency is lower than anticipated, taxpayers could bear the brunt of these inefficiencies. Therefore, robust government oversight and performance management are crucial to ensure that the value secured through the initial competition is realized throughout the contract's lifecycle.

Industry Classification

NAICS: Administrative and Support and Waste Management and Remediation Services › Remediation and Other Waste Management Services › Remediation Services

Product/Service Code: ARCHITECT/ENGINEER SERVICES › ARCH-ENG SVCS - GENERAL

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 3

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: I-40 WEST EXIT 114, LAGUNA, NM, 02

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $89,168,331

Exercised Options: $89,168,331

Current Obligation: $89,168,331

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: FA890304D8690

IDV Type: IDC

Timeline